Replies to post #39243 on Artificial Intelligence Tech Solutions Inc (AITX)

[hestheman]

OMG ROFLMAO. One cannot compare Key West reservations to written, binding commitments (AKA contracts) between two companies as is the case here with OMVS/RAD. That is RIDICULOUS. I am simply at a loss for words....WOW.

[Monte_Cristo]

Yours is quite an interesting assertion. It seems others have posed the same concerns as well.

It is a glorified letter of intent.

Does a commitment mean anything? Is it simply a glorified letter of intent ("LOI")? After all, it's not binding, is it?

First, let's start with a statement from the Delaware Court of Chancery from the 2009 ruling in Global Asset Capital, LLC v Rubicon US REIT, Inc. They said:

"parties enter into [letters of intent] for a reason. They don’t enter into them because they are gossamer and can be disregarded
whenever situations change. They enter into them because they create rights."

When I think of "glorified letter of intent," I immediately think of the Texas case of Texaco v. Pennzoil. There, the issue was whether "an agreement in principle" constituted a binding contract. The ruling: YES (lol!!). In fact, this "agreement in principle" let to Pennzoil obtaining damages of $10.5 Billion Dollars and punitive damages of $3 Billion Dollars. Texaco later appealed but the damages were only slightly reduced on appeal.

The fact of the matter is that a commitment, LOI, agreement-in-principle, etc. can, in fact, constitute a binding contract. The law is generally grey in this area and depends on jurisdictional consideration and so on; however, notwithstanding the LOI's language (even if it says NON-BINDING in bold, caps), each case seems to be rooted in the key consideration of the parties' outward intent. Some jurisdictions have even imposed an obligation to negotiate together in good faith to reach a final agreement.

So, when people are quick to cry out that commitments and letters of intent and term sheets are de facto non-binding and thus carry absolutely no weight or relevance, they are sorely mistaken. I certainly don't blame these people for making this mistake - I mean, heck, Texaco's lawyers made a multi-Billion Dollar boo-boo - but I think people need to be educated about this interesting area of contract law so that these same mistakes aren't repeated.

$$$OMVS$$$